2016 (12) TMI 1706 - HC - VAT and Sales Tax

Transit passes - the goods were being transported with the intention of evasion of tax and there was violation of section 78(3) of the Rajasthan Value Added Tax Act - Held that - section 78 (1) & (3) of the RVAT Act mandates for obtaining Transit Pass as also producing the same as and when required - It is surprising that though the owner/ driver/person incharge stopped the vehicle at the Check-post and obtained Transit Pass for one set of goods namely; Leather but no Transit Pass was obtained for such other goods, which were also lying in the same truck and was being transmitted of Pump and Accessories . It is mandatory for a person to obtain Transit Pass for the goods being transported and available with the vehicle when in transit. These provisions in my view are to be strictly complied with mandatory and is required to be taken into consideration in letter and spirit - petition dismissed.

Summary

Issues:
Violation of principles of natural justice in the assessment process; Interpretation and application of section 78(3) of the Rajasthan Value Added Tax Act (RVAT Act) regarding the requirement of obtaining Transit Pass for goods being transported.

Analysis:
1. Violation of Principles of Natural Justice:
The petitioner contended that the Assessing Officer's order lacked natural justice as no hearing opportunity was granted. The Dy. Commissioner (A) acknowledged this violation and deleted the penalty. However, the Tax Board reversed this decision, upholding the tax levy and penalty. The petitioner argued that all necessary documents were provided, and the goods were not intended for tax evasion. The respondent countered, emphasizing the need for strict compliance with tax laws and the presumption of tax evasion due to the absence of a Transit Pass for specific goods.

2. Interpretation of Section 78(3) RVAT Act:
Section 78(3) mandates obtaining a Transit Pass for goods passing through Rajasthan. Failure to produce a Transit Pass leads to the presumption of goods being sold within the state, attracting tax and penalties. The petitioner obtained a Transit Pass for leather goods but not for "Pump and Accessories," indicating non-compliance. Despite the petitioner's affidavit claiming unawareness of the penalty imposition, the court found it unsubstantiated. The presence of other certificates did not negate the absence of a Transit Pass as required by law.

3. Judicial Precedents and Distinguishing Factors:
The court distinguished cited judgments where facts varied significantly from the present case. In the case of Indore Maharashtra Road Carrier, the absence of evidence ruled out clandestine delivery intentions, unlike the current scenario. Similarly, the Sodhi Transport Company case involved a different legal provision not yet enforced, unlike the clear mandate under section 78(3) RVAT Act. These distinctions justified the Tax Board's decision based on factual findings.

4. Final Judgment:
The court upheld the Tax Board's decision, deeming it legally sound and factual. No legal grounds for interference were found, dismissing the petitioner's claim as meritless. The strict compliance requirement of obtaining Transit Pass for goods in transit was emphasized, reinforcing the importance of adherence to statutory provisions in tax matters.